Two Guaranty Title co-owners settle state complaint, turn in licenses

Two co-owners of a Nixa-based title insurance agency that abruptly closed last year have settled a complaint filed in December by the Missouri Department of Insurance, Financial Institutions and Professional Registration.

DIFP announced May 30 that its Consumer Affairs Division had obtained a consent order from the now-defunct Guaranty Title Co. and former co-owners Rick G. Burton, of Nixa, and Stephanie L. Gray, of Sarcoxie. Burton and Gray co-owned the title insurance agency with Kathy C. Stanton, also of Sarcoxie, who was not part of the settlement and is scheduled to appear before the Administrative Hearing Commission on Nov. 3 in Jefferson City.

Under the consent order, the department revoked insurance producer licenses belonging to Burton and Gray. The revocation was immediate and indefinite in scope, said DIFP spokeswoman Emily Kampeter, who noted that federal authorities could still elect to pursue criminal charges against the company’s co-owners.

DIFP officials have alleged that the company’s three co-owners failed to:

• remit some $400,000 in title insurance premiums to its Virginia-based underwriter, LandAmerica Financial Group;

• disburse funds from escrow accounts with corresponding deposits; and

• conduct reasonable reconciliations of escrow and disbursement accounts.

Last June, Guaranty Title shuttered at least nine regional offices and laid off about 45 people. In the weeks that followed, LandAmerica auditors discovered $5.1 million missing from the agency’s escrow accounts at area banks – likely the result of an alleged check-kiting scheme.

Stanton, who also is known as Kathy Allen, has admitted to a “scheme of commingling and transferring funds between and among different banks and multiple accounts to replenish shortages and to also mask shortages,” according to Christian County court records.

“When a title insurance agency closes its doors, many Missouri consumers and businesses experience delays in closing and sometimes significant financial hardship,” Director Doug Ommen said in a department news release.

“This department will continue to take action against any title insurance agent and agency that takes advantage of consumers and businesses by misusing their escrow funds,” he added. Last year, Missouri lawmakers passed title insurance reform legislation signed into law by Gov. Matt Blunt.

The law prohibits misuse or commingling of real estate closing or settlement funds with tight restrictions for deposits and disbursements and requires title insurance companies to actively oversee their agents by conducting annual reviews of escrow, underwriting and claims practices, according to DIFP.

This story originally appeared in SBJ’s June 2 free e-news Daily Update. Click here to register.[[In-content Ad]]